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Kiwi eyeing extension beyond 0.67

NZD - New Zealand Dollar

The New Zealand Dollar advanced through trade on Friday falling just short of 0.67. The NZD benefited from broad based USD selling as investors shrugged aside a surprise upside in PPI inflation data and concerns surrounding the effects of the US-China trade war to focus on expectations surrounding Fed Monetary policy. The NZD advanced to touch 0.6696 up 1% on the start of the week.

The Kiwi is firmly entrenched in the middle of the years trading band; however, we expect ongoing strength will be hard one. Our attentions turn to Tuesday quarterly CPI print and despite acceleration driven by Oil prices and higher food costs annual inflation will likely remain below the RBNZ’s 2% target, opening the door for additional rate cuts moving into the latter half of the year.

Key Movers

The US dollar was weaker across the board on Friday down three tenths of a percent when valued against a basket of major counterparts. An uptick in the PPI index for inflation did little to quell comments from Fed Chari Jerome Powell, wherein the Fed Chair all but committed to loser monetary policy moving forward.

The Euro continues to struggle for direction. Despite the shifting USD monetary policy landscape the 19 nation combined unit remains hostage to sustained softness across domestic data sets and expectations the ECB will deliver another dovish address when it meets later this month. We expect the Euro to remain range bound between 1.14 and 1.1150 with no real catalyst for a break at hand.

Expected Ranges

NZD/USD: 0.6620 - 0.6720 ▲

NZD/EUR: 0.5870 - 0.5970 ▲

GBP/NZD: 1.8700 - 1.8900 ▼

NZD/AUD: 0.9490 - 0.9615 ▼

NZD/CAD: 0.8650 - 0.8750 ▲